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<i>Hermès</i> Case Could Determine How Courts Assess Trademark Rights in Connection with NFTs <i>Hermès</i> Case Could Determine How Courts Assess Trademark Rights in Connection with NFTs

Hermès Case Could Determine How Courts Assess Trademark Rights in Connection with NFTs

The Southern District of New York has issued one of the first opinions addressing the IP implications of non-fungible tokens (NFTs) in Hermès International et al. v. Rothschild case (Case No. 22-CV-384 (JSR)). This is one of the first—but certainly not the last—IP cases involving NFTs. NFTs are uniquely identifiable digital media files “minted” using blockchain technology. The allure of NFTs derives from the exclusivity owners receive from having a digitally unique item that no one else has. The Hermès case gives insight into how future courts may treat NFTs that incorporate the intellectual property of third parties.  

Hermès is a “luxury fashion business” best known for The Birkin bag. The price of these iconic bags can range from thousands to millions of dollars. There is a robust resale market for Birkin bags which often are resold for significantly more than retail. Hermès holds trademark rights for the Hermès and Birkin names and logos, in addition to the Birkin trade dress. 

Mason Rothschild is the leading artist behind the viral phenomenon of the “MetaBirkin.” The “MetaBirkin” NFT is “an image of blurry faux-fur covered Birkin handbag.” Rothschild minted one hundred exclusive “MetaBirkin” NFTs and sold them across four NFT platforms. The entire “MetaBirkin” collection sold for 230 Ethereum, or roughly one million dollars. Rothschild proclaimed that his minted NFTs were “a tribute to Hermès’ most famous handbag, the Birkin, one of the most exclusive, well-made luxury accessories.”

Tribute or not, Hermès filed a lawsuit against the creator of the “MetaBirkin” NFT for “trademark infringement, trademark dilution, and cybersquatting” under the Lanham Act and New York statutes. Hermès alleged, among other things, that the public incorrectly believed Rothschild collaborated with Hermès to create the “MetaBirkin” NFT.

Rothschild moved to dismiss, arguing the MetaBirkins are an artistic expression protected by the First Amendment under Rogers v. Grimaldi. Hermès countered that selling NFTs is clearly commercial use and explicitly misleading. The motion was denied but the court found that “if the commercial aspects of a work intertwined with artistic content, the trademark-using speech must be treated as noncommercial.” The court held that selling NFTs “does not make the [NFT] a commodity without First Amendment protection any more than selling numbered copies of physical paintings would make the paintings commodities for purposes of Rogers.” As such, selling digital art could constitute an “artistic expression” and requires the application of Rogers.

Although the court applied Rogers, the Motion was denied as the Court could not resolve the matter at the pleading stage. The court found that Hermès’ allegations that use of its trademarks was not artistically relevant and that the MetaBirkin “explicitly misled” the public into thinking Rothschild’s art was associated with Hermès, created a factual dispute that cannot be resolved on a Motion to Dismiss. Finding that the “Rogers test does not support dismissing the trademark infringement claims at the pleading stages,” the Court also denied the Motion as to the trademark dilution and cybersquatting claims.

Below are a few key takeaways from the “MetaBirkin” NFT case so far: 
  1. The sale of NFTs will not necessarily be considered commercial sales with no First Amendment protections; 
  2. The Rogers test does not protect Rothschild from the Hermès trademark infringement claim at the pleading stage; and,
  3. The court seems to agree with Rothschild’s concession that the creation and sale of a wearable NFTs could potentially create a “nonspeech commercial product” that could impact future NFT cases involving the IP rights of third parties.

For more information about this case, please contact Alice Kelly, Michael Ott, Yankun Guo, Alyson Fiedler, or the Ice Miller lawyer with whom you work.

Special thanks to summer associate Cassidy Aranda for her contributions to this article. Cassidy is not yet admitted to practice in any jurisdiction.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

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